The signs are now unmistakeable: a second fiscal stimulus bill and the increase in the deficit and government borrowing that it will cause is now more likely than not.

This is a huge change from as recent as a week ago.  At that point the Bush position that the first stimulus should be allowed to go into effect before a second was enacted was commonly being accepted because a veto was considered to be certain.

But that was before the Bear Sterns deal was announced.

The mood in Congress changed almost immediately.  Bailing out a bank gave reprsentatives and senators permission to talk seriously about providing similar treatment for their constituents.  So all of a sudden, the homeowner bailout using taxpayer funds that wasn't happening seven days ago is now very much alive and well and living in Washington.

If Congress can resist adding too many additional provisions, this bill has a strong likelihood of being enacted.  It's hard to imagine how Republicans could vote against it, or how they could vote to sustain a veto.

So fiscal policy, which last month was said to be too slow to be of much help in the current economic situation, is now very much back in play.

And given some of the numbers being discussed behind the scenes, another $20 billion increase in the FY08 deficit should be considered likely.